Pre-Sale Financial Assessment

Note: The Pre-Sale Financial Assessment can be performed at any time, even if you previously elected to skip this step.

The Importance of Preparing for Due Diligence

If you’re planning to sell, you can’t afford to ignore your company’s flaws. You won’t really know where your business needs improvement until you prepare for due diligence. Some challenges with a business involve a simple fix yet yielding a high return. Due diligence, simply put, is the buyer’s investigation into every aspect of your business. There are many advantages to preparing for due diligence, and we believe this is a crucial step in selling your business quickly and for maximum value.

The number one deal-killer when selling a business is inaccurate or incomplete financial records. With inaccurate financial records, you run the risk of losing a buyer because, by the time the buyer discovers any inconsistencies during due diligence, the sale must be delayed to address the problems. After spending many months finding a buyer, losing them over something that could have been corrected from the outset is a waste of valuable time, money, and resources.


The primary purpose of preparing for due diligence is to evaluate your company and address problems before placing your business on the market.

Benefits of Preparing for Due Diligence Early On

When a buyer decides to pursue the purchase of your business, they will conduct their own due diligence in order to determine what is really going on with the business before committing to purchasing it. Unexpected issues that arise in the course of the buyer’s investigation may potentially kill a deal.

However, with advanced notice of any unsettled problems, a seller can resolve many issues before a buyer ever learns of them. Identifying a problem in advance, and explaining it to the buyer, will keep the seller’s credibility intact.

As the seller, preparing for due diligence enables you to work out problems before a buyer comes into the picture. There is nothing worse than spending time and money preparing and marketing your business for sale, only to lose a qualified buyer because of an unforeseen problem with financial records that could have been resolved beforehand.

This scenario happens more often than sellers realize because despite living and breathing their businesses — or maybe because of it — owners are often unaware of seemingly simple issues. But those simple issues can have a material effect on a buyer’s perception of the relative risk of a company. Issues with financial records, if not addressed in advance, usually trigger demands for a lower price or cause the buyer to walk away from the sale entirely.

Potential Advantages of Preparing for Due Diligence

  • Prepares the business and management for a sale.
  • Helps accelerate the sale process.
  • Optimizes the price and structure of a prospective transaction.
  • Helps eliminate surprises and resulting delays during the sale process.
  • Allows the seller to control the timing and presentation of information.
  • Helps the seller maintain negotiating leverage throughout the due diligence process.
  • Provides the seller an opportunity to fix problems and increase the asking price.

How Morgan & Westfield Can Help You Prepare for Due Diligence

We help our clients maximize the value of their businesses by providing an independent assessment of the company. In effect, we “look through the eyes of a buyer.” We achieve this by identifying issues with financial records early on to avoid complications that can affect the transaction.

Thoroughly preparing for due diligence is imperative for the following reasons:

  • It allows you to correct potential problems and helps avoid pitfalls to a sale before you expose your business to buyers.
  • Through the process, members of your adviser team come to know and understand your company as well as you do — and far better than a potential buyer. This understanding enables us to prepare your confidential information memorandum (CIM) and other marketing materials that fully describe and highlight the strengths of your business.

A thoughtful evaluation of the business before the sale process begins will make the process more manageable, efficient, and cost-effective for a seller.

Morgan & Westfield assists clients with evaluating many of these key points. We examine your profit and loss (P&L) statements, balance sheets, and federal income tax returns, scrutinize key ratios, trends, and other data, and provide you with a report of our findings. This helps spot potential issues that a buyer may find with your financial records and allows you to address them before you ever get an offer.

Having your financial records in order before selling your business also potentially speeds up the due diligence process once you have a buyer, resulting in a higher chance of closing the deal. This is because a buyer who has issues with your financial records will most certainly conduct due diligence very thoroughly, looking for problems in other areas as well.

Finally, accurate financial records may maximize the sale price of your business by attracting buyers who are confident in your business. Simply put, the more organized your business’s financial records appear, the faster you are likely to sell your business and receive top dollar doing so.

Disclaimer: This service is a limited financial assessment intended to assist you in understanding and organizing your business in preparation for sale. It is neither a review nor an audit report, nor is it intended to be taken as such. We will rely on the information provided to us and do not make any independent investigations. The report will make no guarantees, representations, or warranties regarding the concerned business and may not be used as the sole basis for a decision to buy or sell the business.